Liberty International Insurance Ltd v. Chan Shuk Fan

HCMP 988/2024

[2025] HKCFI 3825

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 988 OF 2024

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BETWEEN

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DECISION ON STAY

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1.This is an application by the Defendant by summons filed on 27 May 2025 (the “Summons”). The Defendant seeks to stay the execution of the order of this Court dated 21 March 2025 (the “Order”). The Order granted the Plaintiff a declaration that it is entitled to avoid the private car insurance policy (the “Policy”) issued by the Plaintiff to the Defendant on the ground that the Defendant obtained the Policy by non-disclosure of a material fact or by a representation of fact that was false in some material particulars or both.

Background facts

2.The relevant facts upon which this Court granted the declaration by its Order are set out in the Decision dated 21 March 2025 (“Decision”) to which reference should be made. This Decision on Stay adopts the nomenclature used in the Decision.

3.On 22 April 2025, the Defendant filed her Notice of Appeal (“NOA”) to set aside the Order and for an order that the Plaintiff’s originating summons be dismissed with costs here and below to the Defendant.

Relevant legal principles

4.It is common ground that the applicable principles for stay of execution pending appeal are those set out by Ma J (as he then was) in Star Play Development Limited v Bess Fashion Management Co Limited [2007] 5 HKC 84 at §§6-10.

5.The relevant propositions are re-iterated in the judgment of the Court of Appeal in Bright Gold Limited v Mega Well Development Limited [2019] HKCA 1440 at §13[1]:

“(a) The applicant must show an arguable ground of appeal (viz. one with reasonable prospect of success) before the discretion to grant stay is engaged;

(b) Even if arguable grounds exist, there must be other circumstances justifying the deprivation of the successful party the fruit of the judgment. Sometimes, the applicant may do so by showing the existence of strong ground of appeal. Sometimes, the applicant may do so by showing that the appeal would be rendered nugatory if no stay is granted. In either case, the court must also have regard to the prejudice that could be suffered by the successful party if a stay is granted. In all cases where the discretion is engaged, ultimately it is a balancing process with common sense;

(c) In assessing the strength of the appeal for the purpose of a stay application, it is impracticable and undesirable to go deeply into the merits. A broad brush approach is called for. Thus, counsel should not attempt to deploy full arguments on law and facts quoting in extenso all the relevant evidence and transcript as if the application for stay is a platform for a rehearsal of the appeal proper. Generally, with the benefit of written skeleton submissions, the court is able to assess whether an appeal has a high prospect of success without lengthy oral submissions from counsel. Application for stay of execution should not be a dry run of the appeal.”

The NOA

6.The NOA raises 2 grounds of appeal:

Ground 1:  error of law in rejecting sections 18 and 20 of the MIO as being applicable to the test of non-disclosure and misrepresentation in section 10(3) of the Motor Vehicles Insurance (Third Party Risk) Ordinance (Cap. 272) (the “Ordinance”); and

Ground 2:  obviously flawed analysis on the Defendant’s knowledge.

Merits of the appeal

7.The answers to the Questions[2] that relate to the assured are representations made by assured to the insurer. They are undeniably material”[3] to the insurer when determining whether it would take the risk or fixing the premium and conditions.

8.But the cover provided by the Policy under the Ordinance is not limited to the assured himself but extends to persons other than the assured if they are named in the Policy, i.e. the named driver(s). It follows that the answers to the Questions in relation to the named driver(s) are equally material to the insurer. This difference is fundamental and distinguishes the Ordinance from the MIO.

9.The insurer is not privy to material information that concerns the named driver. In providing that information to the insurer, given that the contract is one of uberrimae fidei, at a minimum, the assured must have a valid basis for the answers she provides.

10.In that regard, I stand by what is stated in §§32-36 of the Decision. That there must be a basis for the Defendant’s belief has to be the bare minimum required of the Defendant. Arguably, the bar is even higher, requiring the Defendant to ascertain from the named driver his answer to the Questions.

11.Having reviewed the Decision and the NOA, even if (contrary to my views) the appeal is arguable, I do not consider it to be one of substance with strong prospects of success.

12.Moreover, the Defendant has not explained why, absent a stay the appeal would be rendered nugatory. Should the appeal be successful, it remains open to the Defendant to seek redress from the Plaintiff by seeking an indemnity in respect of costs incurred in defending the PI action or for damages to be assessed[4].

13.As the Plaintiff is the successful party, there is no good reason to keep it from enjoying the fruits of its success by staying the Order. A stay will cause prejudice to the Plaintiff who will not be able to rely from on section 10(3) of the Ordinance pending the outcome of the appeal.

Conclusion

14.For the reasons stated, I have no hesitation in dismissing the Summons. I also order nisi that the costs of that Summons be to the Plaintiff, such costs to be summarily assessed and payable forthwith.

15.I direct that in the absence of any application to vary the costs order nisi,

(i)  the Plaintiff do lodge its statement of costs within 21 days hereof;

(ii)  the Defendant do lodge its list of objections (if any, limited to 2 pages) within 14 days thereafter; and

(iii)  the Plaintiff do lodge its reply (if any) within 7 days thereafter.

16.Summary assessment shall take place in Chambers.

Mr Vincent Kee, instructed by Messrs. Fairbairn Catley Low & Kong, for the Plaintiff

Ms Sezen Chong, instructed by Messrs. Chan & Associates, for the Defendant